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September 9, 2008

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.

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[Guidance Overview] IRS Releases HSA Comparability Guidance
Excerpt: "The IRS has proposed regulations on the health savings account (HSA) comparability requirements under the Tax Relief and Health Care Act of 2006. The regulations also explain the penalties for making contributions that are not comparable, which include a 35 percent excise tax." (Watson Wyatt Worldwide)

[Guidance Overview] District Court Rejects 'Substantial Compliance' Argument As Justification for Failure to Exhaust Administrative Remedies
Excerpt: "Failure to exhaust administrative remedies, a venerable and effective ERISA defense, will not be found in the statute. The doctrine is one borrowed from administrative law and imposed by federal courts to trim the docket of cases that might have been resolved by benefit appeals. And so, in [Brown v. J.B. Hunt Transp. Servs.], the plaintiff had a difficult hurdle to overcome when the district court determined that she had failed to appeal the denial of her benefits." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] Enforcement of the HIPAA Privacy and Security Rules, Updated August 11, 2008 (PDF)
18 pages. Excerpt: "This report discusses enforcement of the HIPAA administrative simplification provisions by HHS and DOJ, and provides an overview of the HIPAA Administrative Simplification Enforcement Rule." (U.S. Congressional Research Service)

'Inscrutable' System Used To Price Medical Services Leads to Inflation, Op-Ed States
Excerpt: "The 'inscrutable way that health care providers and insurers put a dollar value on medical services' leaves patients 'unable to determine a fair price for treatment,' Los Angeles Times columnist David Lazarus writes. According to Lazarus, hospitals use a 'cost-plus' system in which they charge patients and health insurers a portion of general overhead in addition to the cost of medical services. Meanwhile, private health insurers, as well as public health care programs, 'negotiate lower rates in return for delivering thousands of patients to a particular clinic or hospital,' Lazarus writes." (Kaiser Family Foundation)

More Employers Utilizing System of Paid Time Off in Lieu of Vacation, Sick Leave or Other Leave Policies
Excerpt: "Essentially, PTO allows employees to draw from a 'bank' of a specific number of days whenever the employee requires a day off. The defining feature of a PTO system is that the nature of the leave is irrelevant because missing a day of work simply depletes the bank by one day." (Human Resource Executive Online)

Opposition by Governor Prompts Supporters to Drop Paid Sick Leave Measure from Ohio Ballot
Excerpt: "The coalition pushing for a state version of the Healthy Families Act in Ohio is having the measure pulled from the November 4 ballot after very effective and well-organized opposition from the Ohio business community. The measure was doomed when Democratic Governor Ted Strickland weighed in against it after unsuccessfully seeking to broker a compromise between business and the bill's supporters." (HR Policy Association)

Legal Issues Relating to State Health Care Regulation: ERISA Preemption and Fair Share Laws (PDF)
18 pages. Excerpt: "Questions have been raised as to whether fair share laws can be preempted by the Employee Retirement Income Security Act (ERISA). This report provides an overview of ERISA preemption, discusses legal challenges to fair share laws, and analyzes the fair share requirements included as part of the Massachusetts Health Care Reform Act." (U.S. Congressional Research Service)

Sources of Health Insurance and Characteristics of the Uninsured (PDF)
36 pages. Excerpt: "This Issue Brief provides historic data through 2007 on the number and percentage of nonelderly individuals with and without health insurance. Based on EBRI estimates from the U.S. Census Bureau's March 2008 Current Population Survey (CPS), it reflects 2007 data. It also discusses trends in coverage for the 19942007 period and highlights characteristics that typically indicate whether an individual is insured." (Employee Benefit Research Institute)

Small Firms More Likely to Offer 100% Employer-Paid Health Care Coverage
Excerpt: "[A new report from the Agency for Healthcare Research and Quality] presents estimates of offer rates and enrollment in employer-sponsored health insurance plans requiring no employee contribution in the ten most populous states in 2005. 'The availability of such plans varies considerably by state and firm size, among other factors,' the AHRQ noted. The brief also reviewed state variations from the national average." (Wolters Kluwer)

Health Coverage Stable Despite Cost Trends
Excerpt: "Employment-based health insurance coverage for the nonelderly population (under age 65) of the U.S. has headed downhill in recent years, but is still roughly constant since 1994, according to a study released by the Employee Benefit Research Institute (EBRI)." (; free registration required)

Choice and Price Competition in Health Insurance Markets
Excerpt: "The question of how choice affects health insurance markets is very relevant for public policy. For example, under the recently enacted Medicare Part D program, most seniors can choose from among dozens of prescription drug plans, and it has not yet been established whether this is a positive or negative aspect of the program." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

Elder Care Programs Become More Important As Baby Boomers Age
Excerpt: "As people are living longer, many employees in their mid- to late 40s are finding themselves [with elder care concerns]. Many have young children, but they also act as caregivers for their parents. Despite this trend, only a small number of employers provide elder care services, experts say. Thirty-nine percent of employers today offer information about elder care services to employees. That's an improvement over 1998, when 23 percent made such services available, according to the Families and Work Institute." (Workforce Management; free registration required)

Recently Passed Wellness Plan for Alabama State Employees Draws Criticism and Kudos
Excerpt: "When the State Employees' Insurance Board of Alabama approved a new wellness plan for its employees, it received a heavy dose of national attention. The focus was directed at what some have called a 'fat tax' -- a punitive charge for obese state workers. But a representative from the State Insurance Board of Alabama and some health-plan experts say the attention is misguided, and defend the wellness plan as appropriate and increasingly common among employers." (Human Resource Executive Online)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] HEART Act Affords Greater Protections to Those Serving on Active Military Duty
Excerpt: "Under the Act, retirement plans must provide certain survivor benefits to participants who die while serving in active military duty and make plan contributions for 'differential pay.' The Act also modifies the tax treatment of certain deferred compensation items." (Littler Mendelson P.C.)

[Guidance Overview] IRS Delay of Effective Date of Electronic Payment Card Guidance for Transit Expenses
Excerpt: "EBIA Comment: This delayed effective date will be welcome news for the transit systems that are still struggling to comply with the technological requirements for vouchers (presumably, such as the need for single-purpose cards or cards with separate 'purses' for transit versus parking expenses). But in the absence of clear guidance from the IRS on the effect of using noncompliant cards before January 1, 2010, cautious employers with noncompliant cards should change to a compliant alternative, if one is available." (Employee Benefits Institute of America)

[Guidance Overview] No Severance Pay for Constructive Termination
Excerpt: "A federal appeals court has concluded that executives were not entitled to severance pay because they were not involuntarily terminated, but were instead, at least arguably, constructively discharged. The case is Mallon v. Trust Co. of New Jersey Severance Pay Plan, 2008 WL 2553027 (3d Cir. 2008)." (National Association of Stock Plan Professionals via Utz, Miller, Kuhn & Eickman, LLC)

[Guidance Overview] Corporate Jets: How to Deal With the Tangle of FAA and IRS Rules (PDF)
3 pages. Excerpt: "Private jet travel's strengthened appeal is all the more reason to be aware of the pitfalls that go with flying on the 'company' aircraft, for business or for pleasure. Problems include the ownership and operational structure of the aircraft because the manner in which the aircraft is owned, operated, and funded can determine what regulations apply and many owners unknowingly fly under the wrong set of regulations." (Thompson Publishing Group via McDermott Will & Emery)

International Accounting Rules Could Affect Way American Companies Compensate Employees
Excerpt: "Companies that adopt international financial reporting standards will need to reexamine their compensation and employee benefit plans. The switchover from U.S. generally accepted accounting principles to IFRS will not only translate into tweaks regarding how companies account for such programs -- but could also change plan design because of the way international rules affect corporate financial statements, according to Deloitte." (

Summary Plan Descriptions Under Scrutiny
Excerpt: "Most Summary Plan Descriptions ('SPDs') contain disclaimer language stating that in case of conflict between the SPD and the Plan documents, the Plan documents will always govern. In fact, sometimes SPDs are given less attention than we benefits lawyers recommend, usually due to cost or other factors and because people often believe that the disclaimer language will protect them. However, whatever the reason, it appears that the courts are not always willing to enforce provisions of a Plan document that are not disclosed in the SPD, despite the disclaimer language." (Attorney B. Janell Grenier via

Opportunities Exist in Linking Equity Awards and NQDC Programs
Excerpt: "Recent regulatory changes are creating some new synergies between equity awards and non-qualified deferred compensation programs. Those opportunities - and the shifts that have created them were addressed in a the latest of PLANSPONSOR's Nonqualified Deferred Compensation Plan Web cast series by John N. Smith, III Vice President and Corporate Benefit and Institutional Specialist for Merrill Lynch Retirement Group." (; free registration required)

Newly Posted Events
(Post Yours!)

ERISA Basics (60-Minute Power Series)
Nationwide on September 16, 2008
presented by International Foundation of Employee Benefit Plans

The Savvy Self-Funding Healthcare Conference & Expo
in Missouri on June 1, 2009
presented by Savvy Self-Funding Healthcare Conference & Expo

Newly Posted Press Releases
(Post Yours!)

MassMutual Launches TPA Registered Product
MassMutual Retirement Services

ERIC Urges DOL to Delay Effective Date of Proposed Participant Fee Disclosure Regulations, Among Other Recommendations
ERIC (ERISA Industry Committee)

CDM Retirement Consultants, Inc. Provides New Service Package for 403(b) Plans
CDM Retirement Consultants, Inc.

Wachovia Offers Live Retirement Consultation to Plan Participants
Wachovia Retirement Services

401k Producer Services Rebrands as Retirement Plan Advisory Group
401k Producer Services

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Employee Benefits Administration
for Primary Consulting, Inc.

DC/401(k) Plan Administrator
for Escondido California (North Inland San Diego County)
in CA

Benefit Funds Administrator
for Northern Illinois Taft Hartley Benefit Funds
in IL

401(k) Senior Plan Administrator
for Matthews Benefit Group, Inc
in FL

Employee Benefits & HRIS Platform Manager
for CBIZ
in KS, VA

Benefits Manager 2
for Sun Microsystems Inc
in CA

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